Interactive DIY Euro Bank Stress Test

To all who can't wait for the next European bailout FT rumor that ramps the market 30 minutes before close (only to be completely refuted by Europe itself 30 minutes after that but by then nobody will care), which last night turned out to be speculation of a third and certainly not final version of the joke that is the stress test, here is your chance to run and execute your very own interactive European stress test and not have to wait for the conflicted European media to tell you the outcome. That said, we could argue that Reuters, which created this test, may have been a little optimistic, for the simple reason that assuming a scenario that sees 100% writedowns on all PIIGS bonds, and assuming a 2% Tier 1 capital target, sees just 46 banks failing the "test" with a €257 billion capital deficiency. So as cool as it is, Reuters failed the simplest sniff test, as somehow the apocalypse scenario of a complete pan-European wipeout sees just a quarter of a trillion in capital needed, when in reality every bank in Europe would be completely insolvent. Still, it is fun to play around with. For a few minutes...

One of the many big lies. My fear is that at some point in the future we will be beating bankers to death with clubs. That will be the moment in history when we are at great risk of ramping it up a notch and doing something stupid.

My main business is IT - where "stress test" is a common scenario. And after 20 years of experience I can tell: blatant lie! It's all "sunny weather stress". Hitting reality the tested object fails due to "unforseen circumstances".

Because the more it looks like a total bank collapse the more likely governments will throw a ton of money at the situation in a vain attempt to fix it.

It worked out great for bankers the last time. Instead of joining the unemployment line they all got new yachts and 15k sq ft homes.

The greatest thing for them is equity inflation because the top 1% owns the largest percentage of stock and equity inflation has surpassed price inflation for a long time. $8 a gallon gas doesn't mean anything to you if your shares of stock quintuple. I mean hell a $10k investemnt in a few stocks during march 2009 could have turned you into a millionare. Think about a guy with a few billion to invest.

The only thing that derails the plan is weimar style hyperinflation $100 million doesn't mean much if a cup of coffee costs $1 million.

I think we've reached a crucial turn: nationalization is not at all the same story as bailout.

It's the difference between being given more credit, time and freedom and none of those things. And once it's seen as the sensible and convenient thing to do it will spread.

It signals that a political solution wins out over faith that free-markets can right themselves. And it signals final loss of faith in banks and their ability to manage their insolvency. It also measn no return to free-wheeling ways any time for a long, long time and it's a victory for the Occupy Wall Street crowd

I'm not an advocate, just the messenger. When you play with fire as the banks did before 2008, you can get burned in a major way. One should never underestimate that throughout history, centralized power increases when chaos prevails in the economy

Victory will not be declared until the federal reserve bank and the practice of fractional lending is a distant memory. When we can look back and say "remember all those dumb years we paid intrest to that sneaky group of central bankers and all they did was print and then lend us back our own money?" then it will be over. No a world ran by bankers is NOT preferable, we are dead if we don't fight and win this one, so if we die fighting we havent lost anything.

YESSSSS. And now you've only begun your journey young grasshopper. This site is still not producing the dismantling of the European union in a rational way and thus fails to explain the obvious holes in their own theories. Wall Street has already "gotten it" and is proceeding accordingly. Avoid the media sensationalism presented/not presented here and use "the simple side of our mind" and you'll see not just how obvious what is going on but where it is even more obviously leading to. No one is "hanging by a thread" to coin a phrase on this. It's as simple as pointing out "in the USA the government took equity stakes in the banks" and proceed.

Not if you lower the Tier 1 capital to 4.8%, then it's all good. See, the problem is those pesky government regulations. If the banks were allowed to increase their leverage to say .... 99 times ... then all these problems would simply go away. Asset reflation could resume, house prices would go up, mini-golf scores would go down.

What is interesting that if no one is going to require these banks to have Tier 1 capital up around 8% then relatively few banks will fail the test (and failing the test is different than failing). History has shown that all the EU, ECB etc "rules" have been thrown out the window so as to advance the farce and this will be no different...stress tests are NOT meant to show area to be fixed but conversely to try to convince capital markets that all is okay...thus the test fails before it is given.

You wanna make some money?
Start dollar cost averaging into brazil now.
In five years you will be so thankful for this advice you will let me have ypur wife or daughter for an evening.

Brazil has the cohesiveness and determination of china so it is not india. It is a fairly honest and open place, so it is not russia, china, nor India.
It has a robust consumer who spends freely but in little debt. Plenty of natural resources. Little government debt.

Did you see the dividend? It will be a wild, volatile ride, but it is the superbric. Dollar cost average every cent you have over the next five years. Do not diversify. Diversification is for pussies.